The U.S. Economy
In the aftermath of the U.S. presidential election, financial markets responded positively to expectations for policies from the administration of President-elect Donald Trump that could lead to more growth, higher inflation, and higher yields. These policies include tax reform, increased fiscal spending, and reduced regulation. Sectors that are expected to benefit from these policy changes have seen the strongest returns in the wake of the election - Financials and Industrials, for instance. Conversely, interest rate sensitive sectors and bond proxies such as Real Estate and Utilities have declined.
We took advantage of the recent market volatility and upgraded our portfolios. We decreased our position in some cyclical stocks that benefitted from the post-election rally and approached our fair value estimate. Also, before the election, we added a basket of biotech stocks. We increased our position in some of these following the election given easing…
